Ampco-Pittsburgh Corporation (NYSE:AP) Q2 2019 Results Earnings Conference Call August 9, 2019 10:30 AM ET Company Participants Melanie Sprowson - Director, Investor Relations Brett McBrayer - CEO Sam Lyon - President, Union Electric Steel Corporation Terry Kenny - President, Air & Liquid Systems Corporation Mike McAuley - SVP and CFO Conference Call Participants David Wright - Henry Investment Trust Operator Good day and welcome to the Ampco-Pittsburgh Corporation Second Quarter 2019 Earnings Conference Ca ...

[Part I – Financial Information](index=2&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) This section presents unaudited financial statements and management's analysis of financial condition and results [Item 1 – Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Ampco-Pittsburgh Corporation, including balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows. It also includes detailed notes explaining accounting policies, discontinued operations, inventory, property, intangible assets, liabilities, borrowing arrangements, pension benefits, commitments, derivative instruments, fair value measurements, revenue disaggregation, stock-based compensation, litigation, environmental matters, and business segments [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific points in time | Metric (in thousands) | June 30, 2019 | December 31, 2018 | | :-------------------- | :------------ | :---------------- | | Total assets | $548,570 | $571,119 | | Total liabilities | $469,818 | $478,150 | | Total shareholders' equity | $78,752 | $92,969 | - Total assets decreased by **$22,549 thousand (3.9%)** from December 31, 2018, to June 30, 2019, primarily due to decreases in cash and cash equivalents, property, plant and equipment, and intangible assets[6](index=6&type=chunk) - Current liabilities decreased by **$21,463 thousand (12.8%)** from December 31, 2018, to June 30, 2019, largely driven by a significant reduction in the current portion of debt[6](index=6&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $102,519 | $118,371 | $210,013 | $224,786 | | Loss from continuing operations | $(653) | $(189) | $(12,612) | $(1,966) | | Net loss | $(3,612) | $(2,700) | $(18,405) | $(1,311) | | Net loss attributable to Ampco-Pittsburgh | $(3,858) | $(2,994) | $(19,006) | $(2,053) | | Basic Net loss per common share | $(0.31) | $(0.24) | $(1.52) | $(0.17) | - Net sales decreased by **13.4%** for the three months and **6.6%** for the six months ended June 30, 2019, compared to the prior year periods[9](index=9&type=chunk) - Net loss attributable to Ampco-Pittsburgh significantly increased to **$(19,006) thousand** for the six months ended June 30, 2019, from $(2,053) thousand in the prior year, primarily due to a **$10,082 thousand impairment charge** and **$1,366 thousand bad debt expense**[9](index=9&type=chunk)[92](index=92&type=chunk)[101](index=101&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement presents the net loss and other comprehensive income or loss components, leading to total comprehensive loss | Metric (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,612) | $(2,700) | $(18,405) | $(1,311) | | Other comprehensive (loss) income | $(1,842) | $(5,539) | $3,304 | $(3,848) | | Comprehensive loss | $(5,454) | $(8,239) | $(15,101) | $(5,159) | | Comprehensive loss attributable to Ampco-Pittsburgh | $(5,565) | $(8,348) | $(15,700) | $(5,867) | - Other comprehensive income showed a positive change of **$3,304 thousand** for the six months ended June 30, 2019, compared to a loss of $(3,848) thousand in the prior year, mainly driven by unrecognized employee benefit costs[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement tracks changes in the company's equity accounts, including common stock, retained deficit, and accumulated other comprehensive loss | Metric (in thousands) | Balance January 1, 2019 | Balance June 30, 2019 | | :-------------------- | :---------------------- | :-------------------- | | Common Stock | $12,495 | $12,624 | | Additional Paid-in Capital | $154,889 | $155,644 | | Retained Deficit | $(30,355) | $(49,361) | | Accumulated Other Comprehensive Loss | $(49,434) | $(46,128) | | Total Ampco-Pittsburgh shareholders' equity | $87,595 | $72,779 | - Total Ampco-Pittsburgh shareholders' equity decreased by **$14,816 thousand** from January 1, 2019, to June 30, 2019, primarily due to a net loss of **$(19,006) thousand**, partially offset by other comprehensive income and stock-based compensation[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities | Metric (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities - continuing operations | $(8,165) | $(5,206) | | Net cash flows used in investing activities - continuing operations | $(3,639) | $(4,226) | | Net cash flows (used in) provided by financing activities - continuing operations | $(1,245) | $12,494 | | Net (decrease) increase in cash and cash equivalents | $(13,433) | $1,448 | | Cash and cash equivalents at end of period | $7,404 | $22,148 | - Net cash used in operating activities for continuing operations increased to **$(8,165) thousand** for the six months ended June 30, 2019, from $(5,206) thousand in the prior year, mainly due to additional investment in trade working capital[15](index=15&type=chunk)[112](index=112&type=chunk) - Cash and cash equivalents decreased by **$13,433 thousand** during the six months ended June 30, 2019, resulting in an end-of-period balance of **$7,404 thousand**[15](index=15&type=chunk)[117](index=117&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=1.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The financial statements are unaudited and include normal recurring adjustments. ASW Steel Inc. has been presented as discontinued operations. The Corporation adopted ASU 2017-12 (Derivatives and Hedging) and ASU 2016-02 (Leases) effective January 1, 2019, with the latter resulting in the recognition of operating lease ROU assets and liabilities - ASW Steel Inc. is presented as discontinued operations following a Board approval in October 2018 to sell the entity[17](index=17&type=chunk) - The Corporation adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing an operating lease ROU asset and liability of **$5,893 thousand**[17](index=17&type=chunk) [2. Discontinued Operations and Disposition](index=8&type=section&id=2.%20Discontinued%20Operations%20and%20Disposition) The Corporation approved the sale of ASW Steel Inc. due to significant losses from a key customer loss and U.S. tariffs, classifying it as discontinued operations. Additionally, a plan to sell certain assets of the Avonmore, PA cast roll manufacturing facility (ANR) was approved, resulting in a $10,082 thousand impairment loss - ASW Steel Inc. was approved for sale in October 2018 due to significant losses

Financial Data and Key Metrics Changes - Ampco-Pittsburgh reported net sales from continuing operations of $107.5 million for Q1 2019, compared to $106.4 million in Q1 2018, reflecting a slight increase [19] - Gross profit as a percentage of net sales decreased to 16.1% in Q1 2019 from 17.6% in Q1 2018, primarily due to lower production volumes for forged engineered products [20] - The company incurred a GAAP net loss from continuing operations of $12.6 million or $1 per common share for Q1 2019, compared to a net income of $1.6 million or $0.12 per common share in Q1 2018 [24] Business Line Data and Key Metrics Changes - The Forged and Cast Engineered Products segment's net sales were flat compared to the prior year, with increased sales of cast and forged rolls offset by a decline in sales to the oil and gas industry [25] - The Air and Liquid Processing segment saw a 5% increase in net sales compared to the prior year, driven by higher sales of air handling units and centrifugal pumps [20][26] - The backlog for the Air and Liquid Processing segment reached approximately $53.7 million, the highest in 10 years, up from $44.4 million at the end of 2018 [15] Market Data and Key Metrics Changes - Sales of forged engineered products to the oil and gas industry decreased by 60% year-over-year, impacting overall sales performance [12] - The company reported a backlog of approximately $349 million as of March 31, 2019, slightly higher than the previous year, with ongoing demand for rolls and additional orders from U.S. Navy shipbuilders [27] Company Strategy and Development Direction - The company announced plans to sell its U.S. cast roll manufacturing facility in Avonmore, Pennsylvania, to improve income from continuing operations by approximately $9 million to $10 million annually [9] - Management is focused on operational improvement initiatives and additional asset restructuring opportunities to enhance efficiency and reduce overhead costs [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the restructuring plan, emphasizing the urgency to demonstrate earnings power and sustainable profitability [31] - The company is currently engaged in a reduction in force as part of its restructuring efforts, which is expected to yield cost savings [50] Other Important Information - The company recognized a $10.1 million noncash impairment charge related to the Avonmore facility, impacting financial results for Q1 2019 [18] - Cash and cash equivalents for continuing operations decreased to $10.4 million as of March 31, 2019, from $19.7 million at the end of 2018, primarily due to a strategic cash management approach [29] Q&A Session Summary Question: What are the gating issues that determine when you close the Avonmore transaction? - Management indicated that the closure timing is dependent on completing customer commitments [32] Question: Any update on the ASW pending sale? - Management stated that they are currently in due diligence with parties interested in the ASW sale [33] Question: Should I assume that the cash proceeds from the Avonmore sale will be minimal? - Management confirmed that the proceeds from the sale are not large and mentioned potential one-time costs associated with winding down operations [35][36] Question: What factors contributed to the positive quarter for forged and cast rolls? - Demand for larger size rolls was strong, and operational improvements led to a 10% efficiency increase, positively impacting the bottom line [44] Question: Are there plans to improve efficiencies in Europe? - Management indicated that while the focus is currently on the U.S., improvements in Europe will be considered in the near future [47]

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-898 AMPCO-PITTSBURGH CORPORATION Pennsylvania 25-1117717 (State of Incorporation)(I.R.S. Employer Identification No.) 726 Bell Avenue, Suite 301 Carnegie, ...

Financial Performance - The backlog of orders as of December 31, 2018, was approximately $343 million, an increase from $325 million at year-end 2017, with about 37% expected to be released after 2019[17]. Company Overview - Union Electric Steel Corporation is one of the largest producers of forged hardened steel rolls globally, servicing various industries including steel and aluminum production[7]. - The company has an equity interest in three joint ventures in China, including a 59.88% interest in Shanxi Åkers TISCO Roll Co. Ltd.[9]. - The Corporation's subsidiaries had 1,922 active employees as of December 31, 2018, with approximately 120 employees from ASW Steel Inc.[21]. Strategic Decisions - The sale of ASW Steel Inc. represents a strategic shift and has been accounted for as a discontinued operation[10]. Product and Market Information - The Corporation's products are custom-engineered and sold to sophisticated commercial and industrial users worldwide[14]. - The company does not rely on any single supplier for raw materials, which are generally available from multiple sources[15]. - The Corporation's operations face considerable competition based on quality, service, price, and delivery in both segments[19]. Environmental Considerations - Environmental control expenditures were not material in 2018 and are not expected to be significant in 2019[20]. Leadership - The Corporation's executive team includes J. Brett McBrayer as CEO since July 2018, with extensive experience in manufacturing and distribution[24].

Financial Data and Key Metrics Changes - Ampco-Pittsburgh Corporation reported net sales from continuing operations of $95.8 million for Q4 2018, down from $103.6 million in Q4 2017, reflecting an approximate 8% decrease [17] - Gross profit as a percentage of net sales decreased to 13.0% in Q4 2018 from 17.9% in Q4 2017, primarily due to lower production levels in the Forged and Cast Engineered Products segment [18] - The company reported a net loss from continuing operations of $41.0 million or $3.28 per common share for Q4 2018, compared to a net loss of $4.2 million or $0.34 per common share for Q4 2017 [20] Business Segment Data and Key Metrics Changes - The Forged and Cast Engineered Products segment saw a decrease in net sales of approximately 8% compared to the prior year, driven by lower shipment volumes for oil and gas products and equipment downtime [22] - The Air and Liquid Processing segment's revenue was approximately comparable to the prior year, but it recorded an operating loss due to a $32.9 million asbestos charge [23] - Backlog at December 31, 2018, was approximately $343 million, an increase of about 6% from $325 million at the end of 2017, indicating improved demand [23] Market Data and Key Metrics Changes - The global short-range outlook for steel demand in 2019 is expected to remain positive, supported by the company's order backlog, although challenges remain due to trade tensions and currency instability [13] - The company noted that the steel industry is facing uncertainty, which could impact future demand [13] Company Strategy and Development Direction - The company is restructuring to return to profitability, including the divestiture of its Canadian subsidiary ASW Steel and pursuing cost reduction initiatives [7][8] - Plans include simplifying the manufacturing flow path to improve operational performance and free up working capital [9] - The focus for 2019 is on execution of the turnaround plan, with an emphasis on right-sizing capacity and reducing complexity in operations [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged 2018 as a challenging year despite a 9% increase in total revenue from continuing operations, citing higher raw material costs and equipment reliability issues [9][10] - The management expressed confidence in the company's ability to adapt to both higher and lower demand environments, aiming for sustainable profitability [13] Other Important Information - The company recorded a $15 million impairment charge related to the divestiture of ASW Steel, which has been classified as a discontinued operation [15] - The asbestos charge of $32.9 million reflects estimated costs for pending and future litigation, impacting the Air and Liquid Processing segment [16] Q&A Session Summary Question: Concerns about selling the Canadian division and stock performance - Management acknowledged the challenges in the steel industry and emphasized the strategic decision to divest ASW Steel due to tariffs and loss of a key customer [30][46] Question: Complexity in manufacturing processes - Management discussed plans to simplify manufacturing processes to reduce costs and improve responsiveness to market demands [37][40] Question: Asbestos charge and future liabilities - Management clarified the change in estimating future asbestos liabilities, projecting out to 2052 to reduce volatility and provide clarity to investors [54][57]